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A brief introdcution to web business & revenue models with a more in depth look at subscriptions and advertising.
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Web Business & Revenue Models
Caelen King CEO RevaHealth.com
@revahealth.comblog.revahealth.com
Who Am I
Product Manager Baltimore Technologies. Software license sales > €150 million.
CEO & Founder of RevaHealth.com. Raised > €2M. Subscription, Transaction & Advertising models.
VP Product NewBay Software. White labelled web apps > 15 million users
A Start up Revolution
Never before has it been possible to build a global business with so little capital
Web Business 101
Who will pay?
How much will they pay?
How will they pay?
Can you reconcile revenue to costs?
Merchant Operating a Market
Application Provider
Utility Publisher or Broadcaster
5 Web Business Types
Software License
White / Co Labelling
Mark Up
Commission
Subscription
Pay Per Use
3rd Party Sponsorship / Advertising
Reven
ue M
od
els
3rd Party Sponsorship
Mark Up
Pay Per Use
Operating a Market
Subscription
Commission
Publisher or Broadcaster
UtilityApplication Provider
Merchant
Software License
White / Co Labelling
Webware top 100
Software License - Problems
Profitable deals can turn unprofitable in year 2 & 3.
Requires world class sales or distribution team and difficult to scale
Product become sales driven, not market driven resulting in feature bloat
White Labeling
Develop, maintain, deploy and operate massive web application for organizations with an existing consumer base
Puts you more in control of your own destiny than software licensing
Much better long term revenue model
Still requires high level sales or distribution channels
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Subscriptions
Beautiful Revenue Model
We’re Rich
Hooray!
Churn
5% Annual Churn
Hey I’m still pretty rich
15% Annual Churn
Ok, I can deal with a smaller car
30% Annual Churn
I’ll get the bus to work
50 % Annual Churn
I’m screwed
Things to know about subs
20% Churn = 100% customer satisfaction.
You must price discriminate
Raise your price
channels
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Advertising
25
26
27
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Pay Per Impression (PPM)
RevaHealth.com can earn $5 PPM
Low risk low reward
Need a lot of impressions
channels
Pay Per Click (PPC) – self sell
RevaHealth.com can earn ~ $1.2 per click on average
Click through rates of 3-4% (7 ads)
Equivalent PPM of about €35
CPC works best if you have transient visitors
Pay Per Action & Affiliates
RevaHealth.com can earn 10% commission on a PPA basis
This is where RevaHealth.com gets paid if the patient actually gets a treatment done
Translates to a €400 PPM
Why we don’t do PPA
Collections & Cash Flow
We do Pay Per Lead
Answers the collections issue
Better monetization than PPC
Not as good as PPA
However better cash flow and costsPPM
3rd party sponsorship lessons
Move as far up the risk categories as possible. PPM – PPC – PPL - PPA
PPC – Tweak & Test and double your revenue
At some point you have pimped out your application too much - StopPPM
Questions?@revahealth.comcking@revahealth.comslides on blog.revahealth.com
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